NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced on Tuesday that he has reached an agreement with a fitness company that allegedly collected money for memberships and then closed without warning.
In 2009, Curves International Inc. allegedly shut the doors on 60 of its health clubs without issuing refunds to those who had signed up for memberships.
"If you do business in New York, then you have to play by the rules. Curves International-like any franchisor operating in the state-must refund the customers who prepaid for memberships they ultimately could not use," Schneiderman said.
"My office will continue to ensure that consumers are treated fairly, and I encourage New Yorkers to learn their rights and report offenses to our office so that we can take action."
Under terms of the settlement, Curves International will reimburse anyone who prepaid for a membership only to find that the gym had closed and the services discontinued. The company will place $100,000 into a reimbursement fund, which will be overseen by the Better Business Bureau.
Additionally, the company will pay $60,000 to the state for costs associated with the litigation.
Originally, Curves International refused to provide refunds for those affected by the 60 closures, Schneiderman says. According to state law, any contract between a consumer and a franchised health club is also enforceable against the franchisor.
According to The New York Health Club Services Act, New Yorkers are protected from unfair sales practices, business and financing methods. Under the law, contracts cannot exceed $3,600 per year, or last for a term longer than 36 months.